Smaller Military Pay Raise Unlikely to Impact Retention

President Obama recently announced that he was ordering a 1.6 percent raise in military base pay starting in January 2017. This is lower than the 2.1 percent raise stipulated by current law and represents the fourth consecutive year that military pay raises have failed to keep pace with private sector wages. Perhaps not coincidentally, this will also be the fourth defense budget enacted since the Budget Control Act implemented caps on defense spending.

Compensation is an important component of a military career, but data suggests that service members are generally pleased with current pay levels.

While U.S. law requires that military pay raises be linked to the private-sector Employment Cost Index, the president has the authority to order alternative pay adjustments if he determines a “national emergency or serious economic conditions” warrant such actions. In his letter to Congress, Obama stated that the smaller pay increase “will not materially affect the Federal Government’s ability to attract and retain well-qualified members for uniformed services.” BPC analysis shows that while a smaller military pay raise, on its own, is unlikely to have an impact on military recruiting or retention, many other aspects of military personnel policy strongly influence service members when deciding to join or stay in the military.

Compensation is an important component of a military career, but data suggests that service members are generally pleased with current pay levels. In the most recent DOD survey of active duty service members, only 23 percent reported being dissatisfied with their total compensation. This is the result of a concerted effort by policymakers to ensure military compensation is competitive with the private sector. Meanwhile other factors that contribute to military recruiting and retention, like deployment tempo and influence over future assignments, are areas of concern for service members and military families.

The military’s most visible retention challenge today is in the Air Force and Navy fighter pilot community. The Air Force provides an excellent example of how a variety of factors influence military recruiting and retention. It was recently reported that the Air Force is short 723 fighter pilots, which represents a 21 percent shortfall of the service’s total fighter pilot requirement. According to Air Force senior leaders, this shortage is caused by an uptick in airline hiring, but more importantly, by a perceived decline in quality of life. While the Air Force has asked for authority to award larger cash retention bonuses, the service also acknowledges that “money isn’t everything.” Non-monetary steps must be taken to ensure fighter pilots and other military personnel are incentivized to continue serving.

Several surveys and studies have shown that service members not only care about how much they are paid, but also about a variety of other elements of military life. For example, improving the military work/life balance, providing service members with more influence over duty assignments, and improving the career prospects for military spouses could be low-cost methods of boosting recruiting and retention.

When properly executed, personnel policy has the ability to ensure the military recruits and retains the top talent it needs to be successful in the future.

A recent Navy retention survey found that only 21.6 percent of sailors believe their work/life balance is ideal. Air Force leaders are confronted by similar challenges and have taken steps to reduce the number of non-job-related additional duties placed on airmen. This is an important step and indicates that military leaders recognize the need to go beyond cash benefits to improve retention. The Pentagon spends millions of dollars training its military personnel, it must protect this significant investment by seeking every opportunity to entice service members to continue serving.

The Bipartisan Policy Center’s Task Force on Defense Personnel believes that the systems and policies that manage military careers must be fundamentally changed to ensure the U.S. military remains the most capable in the world. When properly executed, personnel policy has the ability to ensure the military recruits and retains the top talent it needs to be successful in the future. While a smaller pay raise alone is unlikely to significantly impact recruiting and retention this year, policymakers must prioritize all aspects of military personnel system reform to ensure the military is composed of the talented men and women needed for our country’s national security.